Financial Plan (Budget) and Financial Reporting
What is a financial plan?
A financial plan, which used to be called a budget, must be adopted by all municipalities. The financial plan contains:
- an operating budget
- a capital budget
- a 5-year capital expenditure program, with
- an asset management plan.
If a municipality does not have any capital expenditures planned, that can be noted in the operating budget.
Where can I find more information about the requirements for the financial plan?
The Financial Plan Regulations provide more detail on what is required for each of the three components of the financial plan.
- Sections 2 - 6: requirements for the operating budget
- Section 7: contents of the capital budget
- Section 8-9: contents for the capital expenditure program and asset management program.
Where can I find more information on asset management?
The Infrastructure Secretariat has developed resources to help municipalities with the development of their asset management pans. They have completed an asset inventory for all PEI municipalities. Municipalities who own water and/or sewer infrastructure can access important information about these assets through an online viewer developed by the Province. Contact the Infrastructure Secretariat for more information
The Infrastructure Secretariat has also created a Municipal Expenditure Tool to assist municipalities with their asset management plans for other types of infrastructure (such as parks, trails, and facilities).
How is a financial plan adopted?
Before the financial plan is adopted, there must be a public meeting held at least 2 weeks before the financial plan is adopted by council. This meeting is to provide the public with information about the proposed financial plan. Members of the public do not vote on the municipality's financial plan.
Council must adopt the financial plan by resolution at a council meeting (open to the public) before March 31.
Council meetings are always open to the public except for particular situations – see Council Meetings and Notice Requirements for more information – and council decisions can only be made at a meeting open to the public.
Financial plans must be submitted to the Minister by April 15. They can be sent to the Municipal Affairs Branch.
- Download the Financial Plan Adoption Checklist
Can a municipality budget for a deficit?
Council cannot project a deficit in their operating budget for any fiscal year other than for amortization and the public utility.
If an operating deficit is projected at the end of a fiscal year that is not offset from a reserve fund or surplus fund, the operating deficit must be debited to the operating fund for the next fiscal year unless the Minister has approved another way to address it.
If a municipal council determines during the fiscal year that their operating expenses are likely to exceed revenues and transfers provided for in their operating budget by more than 5%, the council must notify the Minister immediately and the Minister may approve the operational deficit for that fiscal year.
Does my municipality have an annual meeting?
No. Under previous legislation, the rural municipalities used to pass their budget at an annual meeting.
Under the Municipal Government Act, there is no requirement for an annual meeting. If the Council chooses to hold an annual meeting, there are no votes of residents and no resolutions from the floor.
All Councils must have a set schedule of at least six meetings for the year that are open to the public.
What is the municipal financial year?
Starting on April 1, 2019 the fiscal year will run from April 1 – March 31.
To make this transition from the calendar year, there was a 15 month fiscal year (which runs from January 1, 2018 to March 31, 2019).
Property taxation will remain on the calendar year.
What are the financial reporting requirements for municipalities?
Municipalities are required to submit an annual audited financial statement for the municipality to the Minister by July 15.
Municipalities with budgeted expenditures of less than $50,000 are required to appoint an auditor to conduct a review engagement of their financial statements.
Municipalities with budgeted expenditures of more than $50,000 are required to appoint an auditor to conduct an annual audit of the finances of the municipality.
Starting April 1, 2020, all municipalities, no matter what their budgeted expenditures are, will be required to appoint an auditor to conduct an annual audit of finances of the municipality.
What is the Municipal Financial Information Return (MFIR)?
The MFIR is used to collect financial data from all island municipalities. Municipal Affairs uses the data to generate municipal statistical reports and to meet reporting requirements of Statistics Canada, which uses the data for national reporting.
There are two versions of the MFIR that are updated yearly. The first version is for municipalities that do not operate a utility, while the second is for municipalities that operate their own utility. The two versions are provided below:
Please ensure that the information on tab 1 on the MFIR is reviewed and updated annually.
What are the timelines for financial reporting?
- June 30 – Chief Administrative Officers (CAOs) must have documents back from the auditor
- Council approves reviewed/audited financial statements
- July 15 – CAO provides Council and the Minister with the reviewed/audited financial statements and the auditor's report. The CAO must also provide the Minster with:
- A hard copy of the signed cover of the Municipal Financial Information Return (MFIR)
- An emailed digital copy of the MFIR (sent to firstname.lastname@example.org)
- July 31 – Municipality makes the financial statements and associated documents available to the public (public notice must be provided)
Key dates at a glance for the fiscal year April 1, 2019 – March 31, 2020
- PUBLIC MEETING: Not less than 2 weeks before 2019/20 Financial Plan adopted
- MARCH 31, 2019: Adopt 2019/20 Financial Plan (operating and capital budgets), establish tax rates
- APRIL 15, 2019: Submit Financial Plan (budget) to Minister
- JUNE 30, 2019: Receive reviewed/audited 2018/19 Financial Statements from auditor
- JULY 15, 2019: Submit 2018/19 Financial Statements and Municipal Financial Information Return (MFIR) to Council and the Minister
- JULY 31, 2019: Make 2018/19 Financial Statements public